The shadow of expensive gas

Higher gas prices at home are the central focus of the report.

It makes perfect sense, on the face of it.

The more demand there is for a commodity, the higher its price…

Unless supply responds, which the report has conveniently omitted.

U.S. gas producers have recently been curbing production.

Because prices have been too low. And that’s when the U.S. has become the largest LNG exporter in the world. But sure, gas prices are going up any minute now.

Or, imagine that, producers are going to boost output to respond to the higher demand.

Yes, there will be some price rises but these won’t be at the scale the DoE is warning about.

And that’s because the commodity market is a self-regulating mechanism. The moment prices rise too high, demand responds with a decline.

The hidden reason for the LNG hate

“The study found that additional US LNG exports would displace more renewables than coal globally,” the FT reported.

And there you have it.

It’s not about gas prices.

It’s not about emissions.

It’s about “displacing” precious wind and solar.

Simply because they can’t compete with gas and even coal. Did you know coal use this year hit a record?

So much for transition dreams.

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Listen to Life of an Oil Man

Life of an Oilman has covered some big personalities:

• Frank Phillips

• Clint Murchison

• And now…Aubrey McClendon

Aubrey McClendon came from oilfield royalty — his great uncle was the co-founder of Kerr-McGee and an Oklahoma Governor.

In the latest Life of an Oilman, Adam Oxsen covers Aubrey’s rise from local-Oklahoma landman to a global, energy icon.

Go listen to Life of an Oilman.

Desperate supermajors

The EU has been pressuring Big Oil and heavy industries to spend big on emission cuts. This has significantly increased costs for these businesses.

It has done absolutely nothing good for their profitability, however.

So now they’ve grown desperate.

The only way to make their “low-carbon” efforts pay is through forceful measures. And this is exactly what they are asking of Brussels.

“We will need to focus on demand creation to achieve new investment prospects,” they said.

Then then proceeded to the threat, because there’s always a threat.

Unless such demand is created, they will leave Europe.

It’s actually as much a threat as an inevitable move prompted by necessity. If a business wants to survive it would look for livable & profitable conditions.

Conditions in Europe are far from livable & profitable for businesses.

But forcing demand creation is a risky way to make those conditions livable again. The most likely outcome will be economic destruction.

Cost of living crisis on steroids

What happens if Big Oil and heavy industry get their way?

Everything they produce will become even more expensive.

When everything becomes more expensive, people buy less of it.

And yes, that includes food, too.

So, instead of higher demand, you get lower demand.

Instead of profits, you get more losses.

Rioting on the streets is also quite likely in such a scenario.